director of company

Director of Company

A director of company is a person from a group of managers who leads or supervises a particular area of a private limited company. a private limited company that uses this term often have many director of company spread throughout different business functions or roles (e.g. director of human resources). The director of company usually reports directly to a vice president or to the CEO directly in order to let them know the progress of the organization. The large private limited company also sometimes have assistant director of company or deputy directors. Director of company commonly refers to the lowest level of executive in an organization, but many large private limited companies use the title of an associate director more frequently. Some private limited companies also have regional directors and area director of company. Regional directors are present in companies that are organized by location and have their departments under that. They are responsible for the operations for their particular country. Though directors are the first stage in the executive team, area directors are seen as higher up, based on their area of control.

Meaning of Director of Company (private Limited Company) According To the Companies Act 2013

director of company
The supreme executive authority controlling the management and affairs of a private limited company vests in the team of directors of company, collectively known as its Board of Directors. At the core of the corporate governance practice is the Board of Directors which oversees how the management serves and protects the long term interests of all the stakeholders of the Private Limited Company. The institution of board of directors of company was based on the premise that a group of trustworthy and respectable people should look after the interests of the large number of shareholders who are not directly involved in the management of the private limited company. The position of board of director of company is that of trust as the board is entrusted with the responsibility to act in the best interests of the private limited company
Although the Board comprises individual director, yet the actions and deeds of directors of company is individually functioning cannot bind the private limited company, unless a particular director has been specifically authorized by a Board resolution to discharge certain responsibilities on behalf of the private limited company.
The Companies Act, 2013 does not contain an exhaustive definition of the term “director”. Section 2 (34) of the Act prescribed that “director” means a director appointed to the Board of a company is called director of company.
A director is a person appointed to perform the duties and functions of director of a company in accordance with the provisions of the Companies Act, 2013

Who can be appointed as a Director of company

Appointment of a Director of company is not only a crucial administrative requirement, but is also a procedural requirement that has to be fulfilled by every private limited company. A director may be defined as an individual who directs, controls or manages the affairs of the private limited Company.A director of company is a person who is appointed to perform the duties and functions of a private limited company in accordance with the provisions of The Company Act, 2013. They are comparatively known as Board of Directors or directors of company.

Minimum/Maximum Number of Directors ofCompany

The Companies Act, 2013 requires that every company shall have a :
  • Minimum number of 3 directors in case of a public limited company
  • Minimum number of two directors in case of a private limited company
  • Minimum number of one director in case of a One Person Company
  • A company can appoint maximum 15 fifteen directors.
  • A company may appoint more than fifteen directors after passing a special resolution in general meeting and approval of Central Government is not required.
  • Appointment of Directors of company

    Generally, in a public company or a private company subsidiary of a public company, two-thirds of the total numbers of Directors are appointed by the shareholders and the remaining one-third is appointed in accordance with the manner prescribed in Articles failing which, the remaining one-third of the Directors must be appointed by the shareholders. The Articles of a public company or a private company subsidiary of a public company may provide for the retirement of all the Directors at every AGM.
    In a private limited company, which is not a subsidiary of a public company, the Articles can prescribe the manner of appointment of any or all the Directors of company. In case the Articles are silent, the Directors of company must be appointed by the shareholders.
    The Companies Act also permits the Articles to provide for the appointment of two-thirds of the Directors of company according to the principle of proportional representation, if so adopted by the company in question.
    MCA News
    It Is mandatory To file DIR 3 KYC for every director who is in the company or not in the company but having DIN at the end of each Finacial Year i.e. After march and in April

    Conditions for appointment of Directors (Disqualifications)

    The Companies Act, under Schedule XIII, also prescribes certain other conditions that are to be fulfilled for the appointment of a Managing or a Whole-time Director or Manager in case of a public company and a private company that is a subsidiary of a public company. Accordingly, no person shall be eligible for appointment as a Manager, a Managing Director or a Whole-time Director if he or she fails to satisfy the following conditions:

    He or she should not have been sentenced to imprisonment for any period, or a fine imposed under any of the following statutes, namely:
  • The Indian Stamp Act, 1899;
  • The Central Excise Act, 1944;
  • The Industries (Development and Regulation) Act, 1951;
  • The Prevention of Food Adulteration Act, 1954;
  • The Essential Commodities Act, 1955;
  • The Companies Act, 1956;
  • The Securities Contracts (Regulation) Act, 1956;
  • The Wealth Tax Act, 1957;
  • The Income Tax Act, 1961;
  • The Customs Act 1962;
  • The Foreign Exchange Regulation Act, 1973 – now the Foreign Exchange Management Act, 1999;
  • The Sick Industrial Companies (Special Provisions Act) 1985;
  • The Monopolies and Restrictive Trade Practices Act, 1969 – now the Competition Act, 2002;
  • The Securities Exchange Board of India Act, 1992; and / or
  • The Foreign Trade (Development and Regulation) Act, 1973.
  • He or she should not have been detained or convicted for any period under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974. He or she should have completed twenty-five (25) years of age, but be less that the age of seventy (70) years. However, this age limit is not applicable if the appointment is approved by a special resolution passed by the company in general meeting or the approval of the Central Government is obtained.
    He or she should be a resident of India. 'Resident' includes a person who has been staying in India for a continuous period of not less than twelve (12) months immediately preceding the date of his or her appointment as a managerial person and who has come to stay in India for taking up employment in India or for carrying on business or vocation in India. However, this condition is not applicable for companies in the Special Economic Zone, as notified by Department of Commerce from time to time.

    Role of the Directors of company(Duties of Director of Company)

    The role of a director is to manage the day to day operations of the company. This includes the following:
  • To open and operate bank accounts
  • To bind the company by entering into deals and contracts
  • To execute documents on behalf of the company
  • To appoint agents and employ staff
  • When exercising these powers, directors operate as a board as no individual director can make decisions on behalf of the company (unless they are a sole director) and such decisions must be discussed and voted on at board meetings.
    The company’s articles may allow for one director to be empowered to make any and all decisions affecting the day to day activities of the company, this individual is known as the managing director (MD). It should be noted that the MD must still discuss more important decisions (company strategy and/or large contracts and purchases) with the other members of the board.

    Number of directorships of Director

    Maximum number of directorships, including any alternate directorship a person can hold is 20. It has come with a rider that number of directorships in public companies/ private companies that are either holding or subsidiary company of a public company shall be limited to 10. Further the members of a company may restrict abovementioned limit by passing a special resolution
    Any person holding office as director in more than 20 or 10 companies as the case may be before the commencement of this Act shall, within a period of one year from such commencement, have to choose companies where he wishes to continue/resign as director. There after he shall intimate about his choice to concerned companies as well as concerned Registrar.
    Such person shall not act as director in more than the specified number of companies after despatching the resignation or after the expiry of one year from the commencement of this Act, whichever is earlier
    If a person accepts an appointment as a director in contravention of above mentioned provisions, he shall be punishable with fine which shall not be less than Rs. 5,000 but which may extend to Rs. 25,000 for every day after the first day during which the contravention continues

    Residence of a Director of Company in India

    Every company shall have at least one director who has stayed in India for a total period of not less than 182 days in the previous calendar year.

    Structure of Director of Company

    This particular role within the company is often a non executive role that also has the task of overseeing the entire business or organization
    Managing Director
    A managing director is employed by the business, often by the chairman. Other roles include running the business and producing salaries. The managing director manages the board of directors and oversees the performance of the business, thus reporting back to the chairman.
    Executive Directors
    A group of executive directors who each play a significant role within the company. They maintain full responsibility over their respective departments such as Finance, Marketing and Sales. Each director manages their department ensuring that tasks and objectives are being met. Executive directors also sit on the board
    Non-executive directors
    Having a clear structure within the business has a positive impact on the employees and it also helps to organize the business. By having a team of executive directors, employees can report to their executive directors if a problem or an issue occurs

    Woman Director of Company

    Every other public company having paid up share capital of Rs. 100 crores or more or turnover of Rs. 300 crore or more as on the last date of latest audited financial statements, shall also appoint at least one woman director within 1 years from the commencement of second proviso to Section 149(1) of the Act.

    Director Identification Numbers

    Director Identification Number (DIN) is a unique identification number given to an existing or a potential Director of any company which is incorporated. DIN came into existence after the insertion of the section 266A & 266B of the Companies Act, 1956 (as amended vide Act No 23 of 2006).All Directors of Indian companies are required to obtain Director Identification Numbers ("DINs"). Mainly, DINs are required to authenticate any electronic filings made by the company.
    Obtain your DIN
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